UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,

v.

SHAN SHI, Case No. 17-cr-110 (CRC)

Defendant.

MEMORANDUM OPINION

On July 29, 2019, a jury found Defendant Shan Shi guilty of Conspiracy to Commit Theft

of Trade Secrets. Dr. Shi now moves for a judgment of acquittal, arguing that the evidence

presented at trial was insufficient to convince a reasonable juror that he committed the crime.

Finding ample evidence to support the conviction, the Court will deny the motion.

I. Background

The Superseding Indictment in this case charged Dr. Shan Shi and others with conspiracy

to commit theft of trade secrets in violation of

(Count 1); conspiracy to commit

economic espionage in violation of

(Count 2); and conspiracy to launder

monetary instruments in violation of

(h) (Count 3). All three counts involved

an alleged agreement to misappropriate trade secrets related to “syntactic foam”—a

manufactured material consisting of small hollow spheres suspended in epoxy resin. Among

other applications, syntactic foam is used in drill riser buoyancy modules (“DRBMs”). DRBMs

are buoyant casings attached along conduits (or “risers”) that run from an off-shore oil or gas rig

to the drilling equipment on the sea floor. They are necessary to prevent the weight of the risers

from destabilizing the rig afloat on the surface.

In 2014, Dr. Shi established a company in Houston—Construct Better Materials

International (“CBMI”)—to develop syntactic foam for use in DRBMs and related products. Gov. Ex. 2 at 32252, 34574 (corporate overview presentation). CBMI was funded by a Chinese

company—Taizhou CBM-Future New Materials Science and Technology Co., Ltd. (“CBMF”)—

that had been tasked by the Chinese government to help develop the country’s ability to

manufacture marine engineering equipment.

; see also Gov. Ex. 40

(CBMI Articles of Incorporation listing CBMF as the sole shareholder). To advance this goal,

the indictment charges that Shi and the two companies obtained trade secrets from Trelleborg

Offshore US, Inc. (“Trelleborg”), a DRBM manufacturer also located in Houston. 1 They did so,

the Indictment alleges, by hiring former Trelleborg employees, who in turn used and transferred

Trelleborg’s confidential manufacturing specifications and testing procedures to help CBMF

develop syntactic foam in China.

In addition to Shi and the two companies, the charged conspirators included Sam Ogoe

and Gang Liu, both former Trelleborg employees who subsequently joined forces with CBMI;

Uka Uche and Johnny Wayne Randall, two then-current Trelleborg employees who allegedly

sent Trelleborg confidential information to Ogoe after he joined CBMI; Kui Bo, a CBMI

employee involved in developing syntactic foam; and Hui Huang, a China-based employee of

CBMF who allegedly directed some of CBMI’s activities. Ogoe and Bo both pled guilty to one

count of conspiracy to commit theft of trade secrets in violation of

, admitting

that they obtained and/or used Trelleborg confidential information to help CBMF develop

syntactic foam. Uche and Randall also pled guilty to the trade secret theft conspiracy,

acknowledging that they provided confidential Trelleborg information to Ogoe. Liu managed to

1 Trelleborg Offshore US is a subsidiary of the Swedish conglomerate Trelleborg AB. Tr. 1239 (July 16, 2019 a.m.).

2 abscond prior to trial, Huang remained in China, and CBMF and CBMI never appeared, leaving

Dr. Shi as the lone defendant at trial.

The Indictment identifies seven alleged trade secrets that CBMI obtained from

Trelleborg. To better understand the technology involved, a bit must be said about how the

spheres contained in syntactic foam are made and tested. Dr. Kipp Carlisle, a materials engineer

with Trelleborg, summarized the manufacturing process for the jury. He explained that the

process begins by placing polystyrene pellets in a customized tumbler, akin to a cement mixer.

Tr. 1266 (July 16, 2019 a.m.). As the tumbler spins, a syrupy liquid comprised of an epoxy and

a hardening agent is added.

. A fibrous material is then introduced, with the mixture

coating the pellets.

. The liquid eventually forms a hardened shell around the pellets,

creating spheres or “beads.” 2

Trelleborg made spheres of different strengths. Various factors affect the strength of a

sphere, including the number of coats applied to the surface, the type of fiber used in the coating

mixture, and the ratio between the liquid and fiber in the mixture.

. Trelleborg

used three different types of fiber: glass, wollastonite, and carbon, each with different structural

properties and costs.

. Stronger, higher-density spheres are used in deeper water to

withstand the higher pressures to which they are subjected.

. Trelleborg also made

different sized spheres depending on the application for which they were intended.

at 1247-

48.

2 For simplicity’s sake, the Court uses the general term “spheres” to refer to “macrospheres” of the type that Trelleborg produced at its Houston facility, as many of the witnesses did in this case. Macrospheres are not to be confused with the smaller “microspheres” used in other syntactic-foam applications. Tr. 368-374 (July 9, 2019 p.m.) (testimony of Mark Angus, describing the various components of syntactic foam).

3 Carlisle testified that Trelleborg developed manufacturing specifications for its spheres

over time based on research and empirical analysis. Tr. 1163-67 (July 15, 2019 p.m.). These

specifications included calculations for density and pressure resistance at various sea depths for

spheres of different diameters and fiber compositions. While Trelleborg disclosed some of these

specifications in its marketing and bid materials, the complete specifications remained

proprietary. Tr. 1250-51 (July 16, 2019 a.m.). Allen Burgess, Trelleborg’s President, added that

pressure and density specifications, when combined with corresponding depth ratings, were not

publicly available and that it would be “foolhardy” to provide that information to a competitor.

Tr. 1956-58 (July 18, 2019 p.m.). Production engineers on Trelleborg’s shop floor were given

laminated print outs of the specifications for use in the manufacturing process. Tr. 1240 (July

16, 2019 a.m.).

To ensure that the manufactured spheres performed as designed, Trelleborg subjected

them to testing. The lab technicians who performed the tests were given the same specifications

that the production engineers used to make the spheres.

One of the tests—called a

hydrostatic burst pressure test—involved subjecting a sample of spheres to pressure to determine

if they met pre-determined acceptance criteria. If more than a certain percentage of the spheres

remained intact under the pressure, the batch passed the test. Carlisle testified that Trelleborg’s

design team developed the acceptance criteria and testing protocol over time based on trial and

error and did not share them with its competitors.

.

With that primer, the seven alleged trade secrets can be summarized as follows: Trade

Secret 1 is a series of Excel charts reflecting production specifications for various types of

Trelleborg spheres at specified depths. Gov. Exs. 21, 21A, 21B, 21C. Trade Secret 2 is another

set of charts showing the target densities for particular types of spheres at specified depths. Gov.

4 Ex. 23A. Trade Secret 3 is Trelleborg’s standard operating procedure for conducting the

hydrostatic burst pressure test described above. Gov. Exs. 25, 26. Trade Secret 4 is another set

of Excel spreadsheets showing sphere specifications, as well as information about the

manufacturing process like the type of hardener used and the ratio of fiber to coating material.

Gov. Ex. 28A. One of the worksheets within Trade Secret 4 is labeled “Reference – Trelleborg.”

Trade Secret 5 is the formulation that Trelleborg used to make its syntactic foam, with some

of the ingredients specified by brand name. Gov. Ex. 31. Trade Secret 6 is another spreadsheet

showing the number of coats that Trelleborg applied to various types of spheres at specified

depths. It too is labeled “Reference – Trelleborg.” Gov. Ex. 32A. Finally, Trade Secret 7 is a

chart showing bulk prices for the raw materials that Trelleborg used in its syntactic foam. Gov.

Ex. 33A. It is labeled “Reference – Trelleborg” as well.

All told, the jury heard ten days of argument and evidence. Twenty-one witnesses

testified and some 250 exhibits were admitted. After three days of deliberation, the jury returned

a guilty verdict on Count 1 alleging conspiracy to commit theft of trade secrets, and not guilty

verdicts on Counts 2 and 3 alleging conspiracies to commit economic espionage (essentially,

stealing trade secrets to benefit a foreign government) and money laundering. Verdict Form,

ECF No. 260.

II. Legal Standards

On a motion for acquittal under Federal Rule of Criminal Procedure 29, the Court must

consider the evidence in the light most favorable to the government and determine whether the

evidence “is sufficient to permit a rational trier of fact to find all of the essential elements of the

crime beyond a reasonable doubt.” United States v. Harrington,

(D.C. Cir.

1997) (citing Jackson v. Virginia,

(1979)). Because the Court owes

5 “tremendous deference to a jury verdict,” United States v. Long,

(D.C. Cir.

1990), it “must presume that the jury has properly carried out its functions of evaluating the

credibility of witnesses, finding the facts, and drawing justifiable inferences,” United States v.

Campbell,

(D.C. Cir. 1983). Further, the Court must “accord[] the

government the benefit of all legitimate inferences.” United States v. Weisz,

(D.C. Cir. 1983). The standard for “clear[ing] the bar for [a] sufficiency of evidence challenge”

is “very high,” and the evidence to support a conviction does “not need to be overwhelming.”

United States v. Pasha,

, 1135 n.9 (D.C. Cir. 2015). Granting a motion for

judgment of acquittal after a jury verdict is appropriate only where “a reasonable juror must

necessarily have had a reasonable doubt as to the defendant[’s] guilt.” Weisz,

.

III. Analysis

Dr. Shi moves for a judgment of acquittal on Count 1. He attacks the sufficiency of the

evidence supporting his conviction in three main respects. First, he maintains there was no

evidence from which a reasonable juror could have found that he conspired to steal Trelleborg

trade secrets. Second, he argues there was no evidence to support a finding that he “knew or

reasonably believed” that any of the seven alleged trade secrets were trade secrets, as required

for a conviction. Third, he insists there was no evidence that he knew or believed that Trelleborg

had taken reasonable measures to protect any of the seven alleged trade secrets, which the jury

was also required to find.

A. Trial Evidence

The Court begins by cataloging some, but not all, of the trial evidence bearing on Dr.

Shi’s evidentiary challenges before turning to his arguments for why the evidence cannot support

his conviction.

6 In December 2013, Dr. Shi visited Trelleborg’s Houston facility with two senior

employees of CBMF. Tr. 1661-63 (July 17, 2019 p.m.) (testimony of Kui Bo). Trelleborg’s

Director of Human Resources, Jerolyn Jones, testified that at the time of Shi’s tour, Trelleborg

had in place a number of visible physical security measures to protect its confidential business

information. For example, the Houston production facility was fenced and monitored by security

guards and video cameras around the clock, at a cost of $500,000 to the company. Tr. 1503-04

(July 17, 2019 a.m.). Visitors, such as Dr. Shi, were logged in and out and given badges while

present at the facility. Id. at 1505-06, 1511. They were also escorted and told not to take

photographs of the facility. Id. at 1511-12. Particularly sensitive areas such as the testing

facility and R&D lab were locked with coded keypads and only certain employees had access to

them. Id. at 1507-08.

Ms. Jones also described a number of measures that Trelleborg took to protect its

electronically stored data. For example, it followed its parent company’s worldwide IT policy.

Id. at 1513-14. Employees had to enter a log-in ID and a password to access the company’s

computers and network. Id. And employee access to the company’s computer files was

restricted on a need-to-know basis. Id. at 1522.

Dr. Shi incorporated CBMI in 2014 for the purpose of assisting CBMF enhance its

syntactic foam manufacturing capabilities. Gov. Ex. 12A (April 12, 2014 cooperation agreement

between Shi and CBMF to work together to develop marine buoyancy materials). CBMF

viewed the production of syntactic foam and related products as important to China’s efforts to

catch up with the western nation’s deep-sea drilling technology. E.g., Gov. Ex. 4 at 35006

(CBMF marketing proposal explaining that “[a]lthough our country has conducted the related

research in this field for many years, it’s still left behind the advanced level overseas in terms of

7 the performance of the solid buoyancy materials for deep submersible applications.”); Gov. Ex.

40 (CBMI Articles of Incorporation dated March 21, 2014 listing Shi as a Director and CBMF as

the sole shareholder). As part of their collaboration, CBMI and CBMF agreed that the two

companies would protect their technology as trade secrets and that CBMI would not disclose

their technical information without CBMF’s consent. Gov. Ex. 12A at 35020. Additionally, Dr.

Shi indicated to CBMF that he intended to recruit employees from competitors to assist in

developing the foam. See Gov. Ex. 12A (As part of the Cooperation Agreement, Dr. Shi agreed

to “bring in cutting-edge knowledge and high-level talented people”); Gov. Ex. 180 (Shi

handwritten notes indicating that he will “recruit talents (from other companies)” and that

“competitors are more willing to provide detailed information”).

After establishing CBMI, Dr. Shi personally solicited, interviewed, and hired former two

Trelleborg employees who told him that they had access to Trelleborg technical data, either

directly or through colleagues still working at Trelleborg. First, in late 2014, Shi hired former

Trelleborg employee Sam Ogoe. Ogoe testified that he was hired to help CBMI produce

prototype spheres for the May 2015 Offshore Technology Conference (OTC)—the leading trade

show in the offshore energy industry. Tr. 393 (July 9, 2019 p.m.) (discussing the importance of

OTC); Tr. 1801-05 (July 18, 2019 a.m.) (Ogoe testimony). This was a tall order, given that

Ogoe was hired just six months before the conference; that at the time Ogoe was hired, CBMI

had not yet built a working laboratory; and that Ogoe had not worked for Trelleborg for almost

three years. Tr. 1797, 1801-05 (July 18, 2019 a.m.). Despite these limitations, Ogoe further

indicated that he told Dr. Shi that he could “replicate” Trelleborg’s spheres because his friends at

Trelleborg could supply the necessary data. Tr. 1835-36 (July 18, 2019 a.m.); Tr. 1888. (July

8 18, 2019 p.m.) (Ogoe testifying that the reason he was hired was “to get information from

[Trelleborg]—because there’s nowhere else [he] could get the information”).

Soon after Ogoe began working at CBMI, he contacted two former colleagues at

Trelleborg to obtain the company’s manufacturing specifications and test procedures. Tr. 1797,

1802-05 (July 18, 2019). In response, Trelleborg employee Johnny Wayne Randall emailed

Ogoe Trade Secret 1, Gov. Ex. 21, and Trelleborg employee Uke Uche emailed Ogoe Trade

Secrets 2 and 3, Gov. Exs. 23, 25; Tr. 1001-02 (July 15, 2019 a.m.); Tr. 1878-84 (July 18, 2019

p.m.). Ogoe testified that he viewed the data he received as being confidential within Trelleborg.

Tr. 1835 (July 18, 2019 a.m.) (“I did wrong by going there. This is confidential information

. . . . [Trelleborg] would not put it outside.”). The versions of Trade Secrets 1 and 3 that Ogoe

received both contained a Trelleborg logo. Gov. Exs. 21A & 25. After receiving Trade Secrets

1 and 3, Ogoe removed the Trelleborg logo and emailed the data, along with Trade Secret 2, to

Dr. Shi. Tr. 1840-45 (July 18, 2019 a.m.); Tr. 1889 (July 18, 2019 p.m.); Gov. Ex. 26. Dr. Shi,

in turn, forwarded at least some of this information to CBMF in China. Gov. Ex. 27.

In March 2015, Bo sent Dr. Shi the resume of another former Trelleborg employee, Gang

Liu, for consideration as a new employee. Tr. 1684-85 (July 17, 2019 p.m.). At first, Dr. Shi

was reluctant to hire Liu, noting to Bo that Liu did not have a PhD and had worked at Trelleborg

for only a year. Id. Dr. Shi nonetheless decided to interview Liu. Id. Bo testified that “right

after the interview [Dr. Shi] called me. He sound[ed] very excited. And he sa[id]: Yeah, Gang

Liu is the guy that we have been looking for. And also he mention[ed that] Gang Liu kept some

technical data from Trelleborg.” Id. at 1686. Dr. Shi hired Liu and, three days after Liu began

work, he began sending Trelleborg Trade Secrets 4–7 to Shi and CBMI. Gov. Ex. 28. Two of

these trade secrets, 4 and 6, were Excel worksheets sent to Dr. Shi with the “Reference –

9 Trelleborg” tabs visible. Gov. Exs. 28A & 32. Finally, Gang Liu emailed alleged Trade Secret

7, listing Trelleborg’s syntactic foam raw materials with bulk prices, to CBMF in China,

indicating that “[t]he attachment provides technical data . . . received from Trelleborg for your

reference.” Gov. Ex. 33. Dr. Shi is copied on the email. Id.

In the course of recruiting Ogoe and Liu to CBMI, Dr. Shi became aware of some of the

measures Trelleborg took to protect its trade secrets. When Dr. Shi hired Ogoe, he received a

“General Release and Settlement Agreement” that Ogoe had executed upon his departure from

Trelleborg. Gov. Ex. 51. In that agreement, Ogoe promised not to reveal any “trade secrets or

confidential information of the Company” to which he had been exposed while at Trelleborg. Id.

A few months later, Dr. Shi received a nondisclosure agreement that Trelleborg had entered into

with Liu. Tr. 1689-90 (July 17, 2019 p.m.). Shortly thereafter, Dr. Shi tasked Kui Bo with

drafting a standardized nondisclosure agreement for CBMI employees to execute. Id. at 1678.

Bo did so by creating a form agreement almost identical to one that Liu had executed as a

Trelleborg employee. Compare Gov. Ex. 178 with Gov. Ex. 277.

In August 2015, Dr. Shi began discussions with Trelleborg about the possibility of

CBMF selling spheres to Trelleborg. Gov. Ex. 192; Tr. 395-403 (July 9, 2019 p.m). As part of

those discussions, the parties executed a mutual non-disclosure agreement that prohibited CBMF

from disclosing any of Trelleborg’s confidential information. Gov. Ex. 192. Bo testified that

Liu expressed concern about these negotiations, noting the possibility that Trelleborg could

analyze CBMF’s spheres and deduce that they were prepared with Trelleborg’s “recipe.” Tr. at

1697 (July 17, 2019 a.m.); 1788-89 (July 17, 2019 p.m.).

About two years after the events described above, in May 2017, Dr. Shi and Kui Bo made

a sales presentation to representatives of a company they believed to be a potential buyer of

10 syntactic foam. Gov. Ex. 131A (secret video recording of the meeting); Tr. 481-83 (July 10,

2019 a.m.). Comparing CBMI’s spheres to Trelleborg’s, Shi can be heard to say that the quality

of CBMI’s spheres is “much better . . . because we have a lot of lessons learn[ed] from . . .

Trelleborg.” Gov. Ex. 131A. The would-be buyers turned out to be F.B.I. agents, who arrested

Dr. Shi at the conclusion of the meeting.

As noted previously, Sam Ogoe and Kui Bo pled guilty and testified as prosecution

witnesses. The Government introduced both of their plea agreements. Gov. Exs. 220, 222; Tr.

1654 (July 17, 2019 p.m.); Tr. 1794 (July 18, 2019 a.m.).

B. Dr. Shi’s Arguments

1. The sufficiency of the evidence supporting the existence of trade secret theft conspiracy

Dr. Shi contends first that the facts and supporting evidence recounted above (and other

proof offered by the government) cannot support a finding beyond a reasonable doubt that he

was part of a conspiracy to steal trade secrets from Trelleborg.

Shi relies primarily on the testimony of government cooperating witness and former

CBMI employee Kui Bo. Bo testified on direct examination that CBMI’s recruiting efforts were

not limited to Trelleborg employees. Tr. 1737 (July 17, 2019 p.m.). On cross, Bo indicated that

he never directed Ogoe to contact anyone at Trelleborg. Tr. 1771 (July 18, 2019 a.m.). He went

on to testify about an F.B.I.-monitored telephone conversation between him and Dr. Shi on

January 12, 2015. Bo acknowledged that during the call, Shi directed him to ask Ogoe to find

“publications” (rather than trade secrets) regarding what defense counsel characterized as

11 “sphere pressure equations.” 3 Id. at 1777. Finally, Bo engaged in the following exchange with

defense counsel about whether he had an agreement to steal from Trelleborg:

Q: [Y]ou didn’t have an agreement with Dr. Shi to steal anything from Trelleborg, did you?”

A: No, we don’t.

Q: And you didn’t have an agreement with Mr. Ogoe to steal anything from Trelleborg, did you?

A: No, we don’t.

Q: And you didn’t have an agreement with Gang Liu to steal anything from Trelleborg, did you?

A: No, we don’t.

Id. at 1786-87. This combined testimony, Dr. Shi argues, renders any finding of a conspiracy

“factually unsupportable.” Mot. for J. of Acquittal, ECF No. 288, at 6 (“Mot.”).

Bo’s testimony does not bear the weight the defense places on it. That Dr. Shi may not

have targeted former Trelleborg employees exclusively does not foreclose a finding that he hired

Ogoe and Liu with the understanding and expectation that they would continue to have access to

Trelleborg technical data, just as Ogoe testified. Tr. 1835 (July 18, 2019 p.m.). And the absence

of any directives from Bo to Ogoe is not inconsistent with Ogoe’s testimony that he was hired to

“replicate” Trelleborg’s spheres and that Shi understood he would need access to confidential

Trelleborg data in order to do so. Id. at 1835-36. As for the recorded conversation, Shi’s request

for “publications” on an unknown topic, on a single occasion, does not prevent a rational juror

3 While a part of the recorded conversation was played (in Mandarin) to refresh the witness’s recollection and Bo acknowledged that Shi was requesting “publications,” there was no evidence presented to the jury as to the subject matter of the requested publications or that they related to Trelleborg technology. Tr. at 1778 (July 18, 2019 a.m.) (playing Def. Ex. 1027).

12 from concluding that other conduct undertaken by Shi, as described above and considering all

the surrounding circumstances, demonstrated his participation in the charged conspiracy.

Finally, Bo’s disavowal of any agreement on his part to steal Trelleborg trade secrets—

while helpful to the defense—is easily reconciled with the jury’s conspiracy finding. As the

Government points out, Bo could very well have understood defense counsel’s question to be

limited to an explicit agreement or a written agreement, which the jury knew were not necessary

to find that a conspiracy existed. Jury Inst. No. 1 (explaining that the jury was not required to

find “a formal agreement or plan, in which everyone involved sat down together and worked out

the details”). Alternatively, the exchange quoted above could be read to suggest that Bo

understood defense counsel’s question to be whether he personally had agreed to steal something

from Trelleborg. Because Bo himself never took anything from Trelleborg, it may well be true

that he did not agree (with Shi or anyone else) to personally “steal” Trelleborg secrets. That does

not mean, however, that he did not agree to “convey” or “receive” or “possess” Trelleborg’s

trade secrets, each of which could support a conviction on Count 1 and each of which a rational

juror could have found that he did. Finally, the Government introduced Bo’s plea agreement, in

which he admitted to conspiring to steal trade secrets. Gov. Ex. 220. While the defense

accurately points out that the jury was instructed not to infer Dr. Shi’s guilt from Bo’s decision to

plead guilty, Jury Inst. No. 15, nothing prevented the jury from considering the plea in assessing

Bo’s trial testimony. Having done so, a rational juror could have concluded from the plea that

Bo was part of the charged conspiracy, as he confirmed on direct examination, notwithstanding

his testimony on cross and without drawing any impermissible inferences about Dr. Shi.

Dr. Shi argues further that Ogoe’s removal of Trelleborg’s logo from Trade Secrets 1 and

3 before sending them to him proves that they were not conspiring with one another to steal from

13 Trelleborg. The defense contends that Ogoe removed the logos to conceal from Dr. Shi that he

did not derive the data himself, which would be inconsistent with Shi’s involvement in a

conspiracy. The most obvious problem with that contention is that Ogoe denied it. Tr. 1889

(July 18, 2019 p.m.). Rather, Ogoe testified that he modified the spreadsheets before giving

them to Shi because he knew that they would be “presented” further. Id. at 1890. While the

defense challenged that explanation on cross, a rational juror could credit Ogoe’s testimony and

find that he removed the logos to conceal the fact that the data in the charts were misappropriated

from Trelleborg, in furtherance of the charged conspiracy. 4

Finally, Dr. Shi disputes the Government’s contention that he sought to obtain

Trelleborg’s technology because CBMI lacked the necessary equipment and know how to

produce syntactic-foam products on its own. Reply, ECF No. 295, at 7-9. This argument is

largely beside the point. The evidence at trial did not conclusively establish the extent of

CBMI’s independent foam-manufacturing capabilities. But it did show that western companies

controlled the market for deep-water buoyancy products and that Dr. Shi viewed Chinese

capabilities as inferior to those of the market leaders. See, e.g., Gov. Ex. 4 at 35006 (July 2015

CBMF marketing proposal distributed by Dr. Shi opining that “[a]lthough our country has

conducted the related research in this field for many years, it’s still left behind the advanced level

4 The Government suggests that Ogoe removed the logos because he knew the data would be sent to CBMF in China. Opp’n at 18, ECF No. 291. Dr. Shi responds that the Government’s theory does not evince a conspiracy because it would make no sense for Ogoe to conceal the theft from an alleged co-conspirator. Yet one can readily imagine why an individual conspirator would want to cover the tracks of the crime within a corporate organization, even if the organization is complicit as well. The less evidence of the crime there is within a criminal organization, the less likely the entire criminal enterprise will be revealed. In any case, what Ogoe actually told the jury is that he stripped out the logos because he believed the information would be “presented.” Tr. 1890 (July 18, 2019 p.m.). He did not limit this further presentation to CBMF.

14 overseas in terms of the performance of the solid buoyancy materials for deep submersible

applications.”). The evidence also showed that Dr. Shi did in fact transfer Trelleborg design and

testing data to CBMF in China. Gov. Ex. 27. Based on that evidence, the jury had ample reason

to conclude that Dr. Shi sought and transmitted Trelleborg’s technology in order to bridge the

quality gap that he himself identified.

2. The sufficiency of the evidence in establishing that Dr. Shi “knew or reasonably believed” that Trade Secrets 1–7 were trade secrets

In order to find Dr. Shi guilty of Count 1, the jury was instructed that it must find beyond

a reasonable doubt that he conspired to misappropriate one or more of Trade Secrets 1–7

“knowing or reasonably believing” that they were trade secrets. Jury Inst. No. 28. To make that

determination, the jury was given the following definition of a trade secret:

The term “trade secret” means all forms and types of financial, business, scientific, technical, economic, or engineering information, including [as relevant here] . . . formulas, designs, . . . methods, techniques, processes, [or] procedures[,] . . . if each of the following elements are met:

1. The information is actually secret because it is not generally known to, and is not readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information; 2. The owner of the information has taken reasonable measures to keep such information secret; [and] 3. The information derives independent economic value, actual or potential, from being secret.

Jury Inst. No. 29. The jury was also instructed that the Government is not required to prove that

the misappropriated information was in fact a trade secret; only that Shi regarded it as such. Id.

Dr. Shi contends that the trial evidence was insufficient to establish the “knowing and

reasonably believing” element of Count 1. First, he claims there is no evidence showing that he

knew or believed that any of the information he received from former Trelleborg employees

Ogoe or Liu was a Trelleborg trade secret. Mot. at 9-10. And second, he insists that the

15 evidence did not establish that he believed Trelleborg took reasonable measures to protect the

information contained in any of Trade Secrets 1–7. Mot. at 11-14.

a. Trelleborg’s Proprietary Information

On the first point, Shi begins by noting that none of the versions of Trades Secret 1–3 that

he received from Ogoe bore markings indicating they originated with Trelleborg or were

Trelleborg trade secrets. Indeed, as discussed above, when Shi received these documents they

bore no markings of any kind because Ogoe had removed all Trelleborg insignia. As explained,

however, there was sufficient evidence for the jury to conclude that Dr. Shi hired Ogoe with the

expectation that he would have access to Trelleborg technical data and that he would use that

data to “replicate” Trelleborg’s spheres. So, when Ogoe sent him Trade Secrets 1–3, the jury

could reasonably find that Dr. Shi knew where the data came from. Moreover, the jury could

well have found that the “Reference – Trelleborg” tabs on the worksheets containing Trade

Secrets 4–7 put Shi on notice that the accompanying data originated Trelleborg as well. And if

that were not enough, Gang Liu informed Dr. Shi and a CBMF official in an email that the

syntactic foam raw material list and bulk prices he was attaching them “provides technical

data . . . received from Trelleborg for your reference.” Gov. Ex. 33.

Labels aside, Dr. Shi contends that no one in his position would have recognized any of

the materials he received as being proprietary to Trelleborg. Mot. at 10. Not so. As a PhD

scientist with extensive engineering experience, Dr. Shi was no novice in technical matters.

Gov. Ex. 338 at 35125-26. The jury could have reasonably concluded that he well understood

the technical value of the data he received. More specifically, the evidence established that Shi

knew from his dealings with others in the syntactic foam industry that companies considered

their manufacturing data to be proprietary. E.g., Tr. 867 (July 11, 2019 p.m.) (testimony of Marc

16 Schlegel, former CEO of Cuming Company, another syntactic foam manufacturer, indicating

that he informed Dr. Shi during a 2014 meeting that Cuming considered certain aspects of its

sphere processing technology to be proprietary). As noted above, moreover, the evidence

showed that Shi sought to acquire “talent,” Gov. Ex. 180, in order to “digest/absorb the relevant,

critical U.S. technology,” Gov. Ex. 338 at 35134. A reasonable inference from those stated

intentions would be that Shi recognized that the technology he needed was not publicly available

and, therefore, that the materials he received from Ogoe and Liu (or some aspects of them, at

least) were proprietary.

The government also introduced evidence showing that CBMF marketed sample spheres

that it created after receiving the Trelleborg data and, in doing so, insisted on entering non-

disclosure agreements with potential customers. Gov. Ex. 192. If Shi believed nondisclosure

agreements were necessary to protect his own design and manufacturing specifications, certainly

the jury was entitled to conclude that he believed Trelleborg considered similar data to be

propriety.

Finally, the very nature of the information contained in Trade Secrets 1–7 belies Dr. Shi’s

contention that he could not have recognized at least some aspects of that information as trade

secrets. Trelleborg witnesses testified that the data involved design, manufacturing, and testing

specifications—essentially the “secret recipe” that Trelleborg used to produce its spheres. Tr.

1250-51 (July 16, 2019 a.m.) (Carlisle’s testimony that Trelleborg kept the complete

manufacturing specifications for its spheres confidential); Tr. 1835 (July 18, 2019 a.m.) (Ogoe’s

testimony that “I did wrong by going there. This is confidential information. . . . [Trelleborg]

would not put it outside.”). It is difficult to imagine data more proprietary in this particular

industry. To be sure, the defense elicited testimony that certain information within the alleged

17 trade secrets was publicly available or at least widely-known within the industry. But it did not

introduce any evidence—though expert testimony or otherwise—to support its oft repeated

argument that the entirety of the data Shi received was readily available through public sources.

Because there was enough evidence for a rational juror to conclude that Dr. Shi knew or

reasonably believed that at least some of the information in Trade Secrets 1–7 comprised

Trelleborg trade secrets, he is not entitled to a judgement of acquittal on that score.

b. Reasonable Measures

As noted above, the jury was instructed that in order to convict Dr. Shi on Count 1, it

must find that he and at least one co-conspirator “reasonably believed that Trelleborg took

reasonable measures under the circumstances to keep Alleged Trade Secrets 1 through 7 secret.”

Jury Inst. 30. Dr. Shi insists there was no evidence to support the jury’s finding that he had the

requisite state of knowledge regarding Trelleborg’s protective measures. Notably, the

Government strongly objected to the above formulation of the “reasonable measures” jury

instruction. It argued, not without force, that a relaxed standard should apply in cases where the

defendant is an outsider to the company whose trade secrets have been misappropriated because

such a defendant is typically not in a position to know what protective measures the victim

company took, reasonable or otherwise. While sympathetic to that argument, the Court

ultimately overruled the government’s objection and gave the instruction proposed by the

defense, which was consistent with the Ninth Circuit pattern instruction.

The Government still satisfied this stricter requirement. As noted above, the evidence

established that Dr. Shi visited Trelleborg’s Houston facility in December 2013 and observed a

number of physical security precautions. Tr. 1503-06, 1511 (July 17, 2019 a.m.) (testimony of

Trelleborg’s HR Director Jerolyn Jones describing protective measures including guards, gates,

18 cameras, and key pad access to sensitive areas). Those precautions, while perhaps designed to

protect the facility generally, would also have protected against the theft of technical information

like Trade Secrets 1–7 by non-employees.

Ms. Jones also testified that Trelleborg took a number of customary steps to protect its

electronically-stored technical data, such as the spreadsheets containing Trade Secrets 1–7. Id. at

1513-14 (describing how Trelleborg granted employees access to company files on a need-to-

know basis). Indeed, she testified that, based on her extensive experience working in human

resources departments for large companies, Trelleborg’s efforts to keep information confidential

were as good or better than the measures taken by those companies. Id. at 1517-18.

As former employees, Ogoe and Liu were certainly aware of these protections, and the

jury could have reasonably inferred that Shi was also aware of them given that Ogoe told him he

could get technical data from friends (and therefore did not have access himself). Tr. 1835 (July

18, 2019 a.m.). Shi also knew that Trelleborg required Ogoe to enter a General Settlement

agreement when he left Trelleborg, which required Ogoe to deliver all Trelleborg proprietary

data prior to his departure. Gov. Ex. 51. Requiring departing employees to enter such

agreements is surely a reasonable measure to take to prevent them from disclosing trade secret

data after they depart. Dr. Shi knew as well that Gang Liu was subject to an nondisclosure

agreement at Trelleborg and directed Bo to draft an almost identical nondisclosure agreement for

use by CBMI. Tr. 1678, 1689-90 (July 17, 2019 p.m.). Shi’s adoption of the same measure to

protect CBMI’s technical data, including “trade secrets,” supports a finding that he viewed

Trelleborg’s use of the nondisclosure agreement as reasonable. Lastly, Dr. Shi was also made

aware of Trelleborg’s efforts to protect its proprietary information through CBMF’s discussions

19 with Trelleborg about the possible sale of macrospheres, which included a nondisclosure

agreement. Gov. Ex. 192; Tr. 1298-1304 (July 16, 2019 a.m.).

The defense devoted considerable effort at trial to establishing that Trelleborg did not

take all possible measures to protect its trade secrets from disclosure. See, e.g., Tr. 2040-46

(Expert testimony of Eric Cole). But that is not what the jury was required to find. It only had to

find that Dr. Shi viewed the measures that Trelleborg took as reasonable. Based on the evidence

described above, not only could a rational juror conclude that Trelleborg’s protective efforts

were reasonable, they could also conclude that Dr. Shi regarded them as such.

Accordingly, the jury’s verdict must stand in this aspect of the conspiracy charge as well.

IV. Conclusion

For the foregoing reasons, the Court will deny [Dkt. No. 288] Defendant’s Motion for

Judgment of Acquittal. A separate Order shall accompany this memorandum opinion.

CHRISTOPHER R. COOPER United States District Judge

Date: December 17, 2019

20